They want to make their money work for them, and thats completely understandable.
But not everyone is ready to jump in.
This post originally appeared onThe Simple Dollar.
This might seem like an obvious thing, but its not.
At an earlier stage in my financial life, my primary focus was onmy checking account balance.
Did I have enough to make ends meet for the month?
How much money did I have left over to just spend on whatever comes to mind?
There is no investment out there that can even come close to that with any consistency.
This is your first step.
Take charge of it.
Whats left is a much smaller pile.I call it the gapthe difference between my income and my spending.
That gap is the money that I can use to invest.
When it comes down to it, there are really two ways to effectively increase your gap.
you might eitherspend less moneyorearn more money.
They think about money spent on slightly extravagant meals with good friends.
They think of the last hobby item they bought that they really enjoyed.
The idea of cutting those things seems terrible.
Those arent the things you should be cutting.
A drink at the convenience store.
An extra item tossed in the cart at the grocery store.
The digital item bought on a whim, enjoyed once, and then forgot about.
The latte consumed without thought or real pleasure in the morning.
Watch for those things.
Be on guard for them.
When you see yourself about to thoughtlessly spend money on something that doesnt really matter, stop yourself.
Dont spend that money.
Cut that purchase from your life.
Focus on eliminating whatever routine that brought you to the point of making that thoughtless purchase.
You might have a great investment plan, but what happens if you lose your job?
What if you get sick?
What if your car breaks down?
In those situations, many people turn to credit cards, butcredit cards arent the best solution.
They dont help you with identity theft problems at all.
If youre struggling financially, banks can sometimes cancel the cards.
Its there solely to ensure that lifes emergencies dont upset your bigger financial plans.
Im an advocate for what I call the perpetual emergency fund.
Then forget about it.
Let the cash build over time.
Thats the system I personally use and it works like a charm.
Take the stock market, for example.
Its very volatile, meaning that there is significant short-term risk in an investment in the stock market.
You just have to be in for thelong termfor stability.
Thus, if you have a short-term goal, investing in the stock market makes little sense.
However, if youre investing for the long term, it can be a great avenue for you.
All of this thinking should start with your own personal goals.
Why are you investing?
What are you hoping to do with this money?
Are you hoping tobecome financially independentand live off the returns?
Thats a long-term goal, so stock investing might make sense.
On the other hand, maybe youre investing to buy or build a house in a few years.
Why are you doing this?
Figure that out before you invest a dime.
That discussion needs to cover at least three key points.
First,what is the goal?Why exactly is this investment plan going to happen?
What are we hoping to achieve?
Second,what is the plan?How exactly are we investing to achieve this goal?
Do the investment choices make sense?
Where are the accounts and whose name is on them?
Finally,is this something we both agree on?Is the goal something that we both value?
Is the plan something that matches our values while also achieving the goal?
Do you know how to compare two similar investments to each other?
You need those skills before you begin to invest.
Simply trusting someone else to handle it is usually a bad move.
If your bank doesnt offer these services,look at another bank.
The reality is that most banks today offer these things.
Robust online banking is nearly a standard today, as are automatic transfers to and from checking accounts.
Banks that dont offer these features are intentionally making themselves obsolete.
Why are these features so important?
Automation is a big key to investing success you want your plan to basically run on autopilot.
If your bank makes any of this difficult, start shopping around for another bank.
Look at your social circle.
Are those people financially minded?
Do they make smart spending choices?
Or are they constantly buying new things and talking about their latest purchases?
Spend some of your free time at gatherings of people with a stronger financial perspective.
Youll build some new relationships over time, ones that are supportive of positive financial progress.
you should probably have a strong grip over your wants and desires.
you oughta rule them; they shouldnt be ruling you.
Its inevitable to want things sometimes.
The question is, what do we do then?
Do we go ahead and buy that item as soon as reasonably possible?
Do we put up the facade of thinking about it for a while before buying?
Do you have the self-control needed to avoid giving in to every momentary want and desire?
Theyre making a mistake, whether they want to hear it or not.
Of course, I do understandwhypeople want to start investing.
They hear all of the positive spin on investing on channels like the Fox Business connection and CNBC.
They get excited about the possibility of getting a big return on their money.
Image byAlashi(Getty Images).
